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Amazon Surprises With Q2 Earnings; Stock Spikes 17%…

Amazon investors gobbled up shares like hungry piranhas late Thursday after the e-commerce giant reported a surprise profit and better-than-expected sales in the second quarter.

Amazon (AMZN) also gave sales guidance for the current Q3 that was ahead of Wall Street’s target.

Amazon stock jumped 17% to 564 in after-hours trading . During the regular session, Amazon fell 1.3% to 482.18. Shares hit a record 493.20 on Monday.

Amazon now has a market cap exceeding that of Wal-Mart (WMT), the world’s No. 1 retailer by sales.

Q2 net sales rose 20% to $23.18 billion vs. views of $22.39 billion, continuing a string a double-digit year-over-year gains that runs more than four years. Excluding currency shifts, sales would have been up 27%.

Amazon posted losses in three of the prior four quarters as it has invested heavily in businesses from cloud computing infrastructure (Amazon Web Services) to subscription streaming video (Amazon Prime Instant Video).

NASDAQThu, Jul 23, 2015 4:00 PM EDT

AWS Revenue Up 81%

Amazon Web Services generated $1.82 billion in June quarter revenue, up 81% vs. a year earlier and 16% from Q1. It was only the second quarter that Amazon has broken out AWS figures.

AWS had operating income of $391 million, giving the business a 21.4% operating profit margin, vs. 16.9% in the first quarter.

For the current Q3, Amazon expects net sales of $23.3 billion to $25.5 billion, up 13% to 24%. It sees operating income from a loss of $480 million to a profit of $70 million. Analysts had forecast Amazon to lose 61 cents a share on sales of $23.89 billion in Q3.

For the December holiday quarter Wall Street projects EPS will soar 196% to $1.33 while sales advance 17% to $34.44 billion.

“We remain heads-down focused on driving a better customer experience through price, selection and convenience,” Amazon CFO Brian Olsavsky said on a conference call with analysts. “We believe putting customers first is the only reliable way to create lasting value for shareholders.

Prime Success

Last week, Amazon held a one-day sales event called Prime Day, aimed at getting consumers to sign up for Amazon Prime, its $99-a-year membership program. Prime subscribers get free two-day shipping on millions of items and services such as streaming video and music.

Prime Day also was a way for Amazon to defend its turf from old rivals like Wal-Mart and new ones like Jet.com.

“The teams at Amazon have been working hard for customers,” said Amazon CEO Jeff Bezos in a statement. He boasted about Prime Day, Amazon Prime Instant Video original content, the launch of its Echo device and new AWS features and services.

Amazon declared Prime Day a smashing success, saying it sold 34.4 million items, more than its biggest Black Friday ever. It also had more new members try Prime worldwide than any single day ever, the company said.

In January, Amazon said Prime had “tens of millions” of subscribers. Consumer Intelligence Research Partners recently estimated that it has 44 million U.S. subscribers, up 57% vs. a year ago .

In the U.S., Prime members spend an average of $1,200 a year on Amazon, compared with $700 for nonmembers, CIRP says.